Ra 10667 Irr
Ra 10667 Irr
10667
(PHILIPPINE COMPETITION ACT)
RULE 1.
TITLE AND SCOPE
SEC. 1. Title. - These rules and regulations shall be referred to as the “Implementing Rules and
Regulations of Republic Act No. 10667” (Rules).
SEC. 2. Scope. –
a) These Rules shall apply to any entity engaged in trade, industry or commerce in the Republic
of the Philippines or in international trade, industry or commerce having direct, substantial and
reasonably foreseeable effects in the Philippines, including those that result from acts done
outside the territory of the Philippines.
b) These Rules shall not apply to the combinations or activities of workers or employees nor to
agreements or arrangements with their employers when such combinations, activities,
agreements, or arrangements are designed solely to facilitate collective bargaining in respect
of conditions of employment.
RULE 2.
DEFINITION OF TERMS
The following definition of terms shall apply for purposes of these Rules:
a) “Acquisition” refers to the purchase or transfer of securities or assets, through contract or other
means, for the purpose of obtaining control by:
1) One (1) entity of the whole or part of another;
2) Two (2) or more entities over another; or
3) One (1) or more entities over one (1) or more entities;
b) “Agreement” refers to any type or form of contract, arrangement, understanding, collective
recommendation, or concerted action, whether formal or informal, explicit or tacit, written, or
oral;
c) “Conduct” refers to any type or form of undertaking, collective recommendation, independent
or concerted action or practice, whether formal or informal;
d) “Commission” refers to the Philippine Competition Commission created under the Act;
e) “Confidential business information” refers to information, which concerns or relates to the
operations, production, sales, shipments, purchases, transfers, identification of customers,
inventories, or amount or source of any income, profits, losses, expenditures, which are not
generally known to the public or to other persons who can obtain economic value from its
disclosure or use, or is liable to cause serious harm to the person who provided it, or from
whom it originates, and is the subject of efforts that are reasonable under the circumstances
to maintain its secrecy;
f) “Control” refers to the ability to substantially influence or direct the actions or decisions of an
entity, whether by contract, agency or otherwise;
g) “Dominant position” refers to a position of economic strength that an entity or entities hold
which makes it capable of controlling the relevant market independently from any or a
combination of the following: competitors, customers, suppliers, or consumers;
h) “Entity” refers to any person, natural or juridical, sole proprietorship, partnership, combination
or association in any form, whether incorporated or not, domestic or foreign, including those
owned or controlled by the government, engaged directly or indirectly in any economic activity;
i) “Joint venture” refers to a business arrangement whereby an entity or group of entities
contribute capital, services, assets, or a combination of any or all of the foregoing, to undertake
an investment activity or a specific project, where each entity shall have the right to direct and
govern the policies in connection therewith, with the intention to share both profits and risks
and losses subject to agreement by the entities;
j) “Market” refers to the group of goods or services that are sufficiently interchangeable or
substitutable and the object of competition, and the geographic area where said goods or
services are offered;
k) “Merger” refers to the joining of two (2) or more entities into an existing entity or to form a new
entity, including joint ventures;
l) “Relevant market” refers to the market in which a particular good or service is sold and which
is a combination of the relevant product market and the relevant geographic market, defined
as follows:
1) A relevant product market comprises all those goods and/or services which are
regarded as interchangeable or substitutable by the consumer or the customer, by
reason of the goods and/or services’ characteristics, their prices, and their intended
use; and
2) the relevant geographic market comprises the area in which the entity concerned is
involved in the supply and demand of goods and services, in which the conditions of
competition are sufficiently homogenous and which can be distinguished from
neighboring areas because the conditions of competition are different in those area;
m) “Ultimate parent entity” is the juridical entity that, directly or indirectly, controls a party to the
transaction, and is not controlled by any other entity .
RULE 3.
PROHIBITED ACTS
where the object or effect of the restrictions is to prevent, restrict or lessen competition
substantially: Provided, that nothing contained in the Act shall prohibit or render
unlawful:
i. Permissible franchising, licensing, exclusive merchandising, or exclusive
distributorship agreements, such as those which give each party the right to
unilaterally terminate the agreement, unless found by the Commission to have
substantial anti-competitive effect;
ii. Agreements protecting intellectual property rights, confidential information, or
trade secrets;
6) Making supply of particular goods or services dependent upon the purchase of other
goods or services from the supplier which have no direct connection with the main
goods or services to be supplied;
7) Directly or indirectly imposing unfairly low purchase prices for the goods or services of,
among others, marginalized agricultural producers, fisherfolk, micro-, small-, medium-
scaled enterprises, and other marginalized service providers and producers;
8) Directly or indirectly imposing unfair purchase or selling price on their competitors,
customers, suppliers, or consumers, Provided that prices that develop in the market
as a result of or due to a superior product or process, business acumen or legal rights
or laws shall not be considered unfair prices; and
9) Limiting production, markets, or technical development to the prejudice of consumers,
Provided, that limitations that develop in the market as a result of or due to a superior
product or process, business acumen, or legal rights or laws shall not be a violation of
this Act.
b) Nothing in the Act or these Rules shall be construed or interpreted as a prohibition on having
a dominant position in a relevant market, or on acquiring, maintaining, and increasing market
share through legitimate means that do not substantially prevent, restrict, or lessen competition.
c) Any conduct which contributes to improving production or distribution of goods or services
within the relevant market, or promoting technical and economic progress, while allowing
consumers a fair share of the resulting benefit may not necessarily be considered an abuse of
dominant position.
d) The foregoing shall not constrain the Commission or the relevant regulator from pursuing
measures that would promote fair competition or more competition as provided in the Act.
SEC. 3. Determination of exceptions. - In SEC. 2, par. (a) (2), (8) and (9), the concerned entity or
entities invoking the exception shall clearly establish to the Commission’s satisfaction, that the barrier
to entry or anti-competitive act is an indispensable and natural result of the superior product or process,
business acumen, or legal rights or laws.
RULE 4.
MERGERS AND ACQUISITIONS
SEC. 1. Review of mergers and acquisitions. -The Commission, motu proprio or upon notification
as provided under these Rules, shall have the power to review mergers and acquisitions having a
direct, substantial and reasonably foreseeable effect on trade, industry, or commerce in the Philippines,
based on factors deemed relevant by the Commission.
a) In conducting this review, the Commission shall:
1) Assess whether a proposed merger or acquisition is likely to substantially prevent,
restrict, or lessen competition in the relevant market or in the market for goods and
services as may be determined by the Commission; and
2) Take into account any substantiated efficiencies put forward by the parties to the
proposed merger or acquisition, which are likely to arise from the transaction.
b) In evaluating the competitive effects of a merger or acquisition, the Commission shall endeavor
to compare the competitive conditions that would likely result from the merger or acquisition
with the conditions that would likely have prevailed without the merger or acquisition.
c) In its evaluation, the Commission may consider, on a case-to-case basis, the broad range of
possible factual contexts and the specific competitive effects that may arise in different
transactions, such as:
1) the structure of the relevant markets concerned;
2) the market position of the entities concerned;
3) the actual or potential competition from entities within or outside of the relevant market;
4) the alternatives available to suppliers and users, and their access to supplies or
markets;
5) any legal or other barriers to entry.
SEC. 3. Thresholds for compulsory notification. - Parties to a merger or acquisition are required to
provide notification when:
a) The aggregate annual gross revenues in, into or from the Philippines, or value of the assets in
the Philippines of the ultimate parent entity of at least one of the acquiring or acquired entities,
including that of all entities that the ultimate parent entity controls, directly or indirectly, exceeds
One Billion Pesos (PhP1,000,000,000.00);
and
and
iii. If
(a) as a result of the proposed acquisition of the voting shares of a
corporation, the entity or entities acquiring the shares, together with
their affiliates, would own voting shares of the corporation that, in the
aggregate, carry more than the following percentages of the votes
attached to all the corporation’s outstanding voting shares:
(1) Thirty-five percent (35%), or
(2) Fifty percent (50%), if the entity or entities already own more
than the percentage set out in subsection I above, as the case
may be, before the proposed acquisition;
Or
1. (a) Prior to filing a notification pursuant to this Rule, parties to a proposed merger or acquisition
that are required to notify may inform the Commission of their proposed merger or acquisition
and request a pre- notification consultation with the staff of the Commission.
To request a meeting, the parties must provide the following information in writing:
1. (1) the names and business contact information of the entities concerned;
2. (2) the type of transaction; and
3. (3) the markets covered or lines of businesses by the proposed merger or acquisition.
2. (b) During such pre-notification consultations, the parties may seek non- binding advice on
the specific information that is required to be in the notification.
SEC. 5. Procedure for notification and review.
a) Each party to a merger or acquisition required to give notification to the Commission shall
submit the Notification Form and pay such applicable fees as may be determined by the
Commission. An electronic copy of the Form and a scanned copy of the certification referred
to in subparagraph (b) of this Section, contained in a secure electronic storage device, shall
likewise be submitted to the Commission, simultaneous with the filing of the aforementioned
hard copy.
b) The Form must be signed by a general partner of a partnership, an officer or director of a
corporation, or in the case of a natural person, the natural person or his/her legal
representative, and certified that the contents of the Form are true and accurate of their own
personal knowledge and/or based on authentic records. In all cases, the certifying individual
must possess actual authority to make the certification on behalf of the entity filing the
notification.
c) The parties may notify, on the basis of a binding preliminary agreement in any form, such as
a memorandum of agreement, term sheet, or letter of intent. Each of the acquired and
acquiring entities must submit an affidavit with their Forms, attesting to the fact that a binding
preliminary agreement has been executed and that each party has an intention of completing
the proposed transaction in good faith.
d) Both the certification and the affidavit must be notarized or otherwise authenticated.
e) Except as described below, the waiting period begins after all notifying entities have filed their
respective Forms, together with the corresponding certifications and affidavits, and have been
notified by the Commission that the Forms are complete.
1) In voting securities acquisitions, such as tender offers, third party and open market
transactions, in which the acquiring entity proposes to buy voting securities from
shareholders of the acquired entity, rather than from the entity itself:
i. the acquiring entity is required to serve notice on the issuer of those shares to
ensure the acquired entity is aware of its reporting obligation;
ii. only the acquiring entity must submit an affidavit. The acquiring entity must
state in the affidavit that it has an intention of completing the proposed
transaction in good faith, and that it has served notice on the acquired entity
as to its potential reporting obligations (and in tender offers, the acquiring entity
also must affirm that the intention to make the tender offer has been publicly
announced); and
iii. the waiting period begins after the acquiring entity files a complete Form.
f) Upon submission of the Form, the Commission shall determine within fifteen (15) days whether
the Form and other relevant requirements have been completed in accordance with applicable
rules or guidelines, and shall inform the parties of other information and/or documents it may
have failed to supply, or issue a notice to the parties that the notification is sufficient for
purposes of commencing Phase I review of the merger or acquisition.
g) The waiting period under this Section shall commence only upon the Commission’s
determination that the notification has been completed in accordance with applicable rules and
guidelines.
h) Within thirty (30) days from commencing Phase I review, the Commission shall, if necessary,
inform the parties of the need for a more comprehensive and detailed analysis of the merger
or acquisition under a Phase II review, and request other information and/or documents that
are relevant to its review.
i) The issuance of the request under the immediately preceding paragraph has the effect of
extending the period within which the agreement may not be consummated for an additional
sixty (60) days. The additional sixty (60) day period shall begin on the day after the request for
information is received by the parties; Provided, that, in no case shall the total period for review
by the Commission of the subject agreement exceed ninety (90) days from the time the initial
notification by the parties is deemed complete as provided under paragraph (f) of this Section;
Provided further, that should the parties fail to provide the requested information within fifteen
(15) days from receipt of the said request, the notification shall be deemed expired and the
parties must refile their notification. Alternatively, should the parties wish to submit the
requested information beyond the fifteen (15) day period, the parties may request for an
extension of time within which to comply with the request for additional information, in which
case, the period for review shall be correspondingly extended.
j) Parties to a proposed transaction under review shall inform the Commission of any substantial
modifications to the transaction. On the basis of the information provided, the Commission
shall determine if a new notification is required.
k) Where notification of a transaction is not required, then the periods provided above for the
Commission to conclude its review shall not apply.
l) The Commission, in its discretion, may terminate a waiting period prior to its expiration.
m) When either waiting period set out ends on a Saturday, Sunday or holiday, the waiting period
is extended until the next business day.
n) When the above periods have expired and no decision has been promulgated for whatever
reason, the merger or acquisition shall be deemed approved and the parties may proceed to
implement or consummate it.
o) All notices, documents, and information provided to or emanating from the Commission under
Sec. 4 and 5 of this Rule shall be subject to the confidentiality rule under Sec. 34 of the Act
and Sec. 13 of this Rule, except for the purpose of enforcing the Act or these Rules, or when
the release of information contained therein is with the consent of the notifying entity or is
mandatorily required to be disclosed by law or by a valid order of a court of competent
jurisdiction, or of a government or regulatory agency, including an exchange.
SEC. 6. Effect of notification. - If within the relevant periods stipulated in the preceding section, the
Commission determines that the merger or acquisition agreement is prohibited under Sec. 20 of the
Act and Sec. 9 of this Rule, and does not qualify for exemption under Sec. 21 of the Act and Sec. 10
of this Rule, the Commission may:
a) Prohibit the implementation of the agreement;
b) Prohibit the implementation of the agreement unless and until it is modified by changes
specified by the Commission; or
c) Prohibit the implementation of the agreement unless and until the pertinent party or parties
enter into legally enforceable agreements specified by the Commission.
SEC. 9. Prohibited mergers and acquisitions. - Merger or acquisition agreements that substantially
prevent, restrict, or lessen competition in the Philippines in the relevant market or in the market for
goods or services, as may be determined by the Commission, shall be prohibited.
SEC. 10. Exemptions from prohibited mergers and acquisitions. - Merger or acquisition
agreements prohibited under Sec. 20 of the Act and Sec. 9 of this Rule may, nonetheless, be exempt
from prohibition by the Commission when the parties establish either of the following:
a) The concentration has brought about or is likely to bring about gains in efficiencies that are
greater than the effects of any limitation on competition that result or are likely to result from
the merger or acquisition agreement; or
b) A party to the merger or acquisition agreement is faced with actual or imminent financial failure,
and the agreement represents the least anti- competitive arrangement among the known
alternative uses for the failing entity’s assets.
Provided, that an entity shall not be prohibited from continuing to own and hold the stock or other share
capital or assets of another corporation, which it acquired prior to the approval of the Act, or from
acquiring or maintaining its market share in a relevant market through such means without violating
the provisions of the Act and these Rules;
Provided, further, that the acquisition of the stock or other share capital of one or more corporations
solely for investment and not used for voting or exercising control and not to otherwise bring about, or
attempt to bring about the prevention, restriction or lessening of competition in the relevant market
shall not be prohibited.
SEC. 11. Burden of proof. - The burden of proof under Sec. 10 of this Rule lies with the parties
seeking the exemption. A party seeking to rely on the exemption specified in Sec. 21(a) of the Act or
Sec. 10(a) of this Rule must demonstrate that if the agreement were not implemented, significant
efficiency gains would not be realized.
SEC. 12. Finality of rulings on mergers and acquisitions. - Merger or acquisition agreements that
have received a favorable ruling from the Commission, except when such ruling was obtained on the
basis of fraud or false material information, may not be challenged under the Act or these Rules.
SEC. 1. - For purposes of determining the relevant market, the following factors, among others,
affecting the substitutability among goods or services constituting such market, and the geographic
area delineating the boundaries of the market shall be considered:
a) The possibilities of substituting the goods or services in question with others of domestic or
foreign origin, considering the technological possibilities, the extent to which substitutes are
available to consumers and the time required for such substitution;
b) The cost of distribution of the good or service, its raw materials, its supplements and
substitutes from other areas and abroad, considering freight, insurance, import duties, and
non-tariff restrictions; the restrictions imposed by economic agents or by their associations;
and the time required to supply the market from those areas;
c) The cost and probability of users or consumers seeking other markets; and
d) National, local or international restrictions which limit the access by users or consumers to
alternate sources of supply or the access of suppliers to alternate consumers.
RULE 6.
DETERMINATION OF CONTROL
SEC. 1. What constitutes control of an entity. - Control refers to the ability to substantially influence
or direct the actions or decisions of an entity, whether by contract, agency or otherwise.
In determining the control of an entity, the Commission may consider the following:
a) Control is presumed to exist when the parent owns directly or indirectly, through subsidiaries,
more than one half (1/2) of the voting power of an entity, unless in exceptional circumstances,
it can clearly be demonstrated that such ownership does not constitute control.
b) Control also exists even when an entity owns one half (1/2) or less of the voting power of
another entity when:
1) There is power over more than one half (1/2) of the voting rights by virtue of an
agreement with investors;
2) There is power to direct or govern the financial and operating policies of the entity
under a statute or agreement;
3) There is power to appoint or remove the majority of the members of the board of
directors or equivalent governing body;
4) There is power to cast the majority votes at meetings of the board of directors or
equivalent governing body;
5) There exists ownership over or the right to use all or a significant part of the assets of
the entity; or
6) There exist rights or contracts which confer decisive influence on the decisions of the
entity.
RULE 7.
DETERMINATION OF ANTI-COMPETITIVE AGREEMENT OR CONDUCT
RULE 8.
DETERMINATION OF DOMINANCE
SEC. 1. Existence of dominance. - Dominance can exist on the part of one entity (single dominance)
or of two or more entities (collective dominance).
SEC. 4. Setting the thresholds for dominance. - The Commission shall, from time to time, determine
and publish the threshold for dominant position or the minimum level of share in the relevant market
that could give rise to a presumption of dominant position. In such a determination, the Commission
would consider:
a) The structure of the relevant market;
b) The degree of integration;
c) Access to end-users;
d) Technology and financial resources; and
e) Other factors affecting the control of a market, as provided in Sec. 2 of this Rule.
SEC. 5. Exceptions. - The Commission shall not consider the acquisition, maintenance and increase
of market share through legitimate means that does not substantially prevent, restrict, or lessen
competition in the market, such as but not limited to, having superior skills, rendering superior service,
producing or distributing quality products, having business acumen, and enjoying the use of protected
intellectual property rights as violative of the Act and these Rules, Provided, that the concerned entity
or entities invoking the exception shall clearly establish to the Commission’s satisfaction, that the
barrier to entry or anti-competitive act is an indispensable and natural result of the superior product or
process, business acumen, or legal rights or laws.
RULE 9.
FORBEARANCE
SEC. 1. Forbearance of the Commission. - The Commission, motu proprio or upon application, prior
to its initiation of an inquiry, may forbear from applying the provisions of the Act or these Rules, for a
limited time, in whole or in part, in all or specific cases, on an entity or group of entities, if in its
determination:
a) Enforcement is not necessary to the attainment of the policy objectives of this Act;
b) Forbearance will neither impede competition in the market where the entity or group of entities
seeking exemption operates nor in related markets;
c) Forbearance is consistent with public interest and the benefit and welfare of the consumers;
and
d) Forbearance is justified in economic terms;
Provided, that forbearance will be granted for a maximum period of one year. Any extension to the
period will have to be expressly approved by the Commission. Any extension of the duration of an
exemption shall not be longer than one year.
RULE 10.
FINAL PROVISIONS
SEC. 1. Revisions of these Rules. - The Commission may revise these Rules whenever it deems
necessary and after due consultation with affected stakeholders.
SEC. 2. Separability clause. -Should any provision herein be subsequently declared unconstitutional,
the same shall not affect the validity or legality of the other provisions.
SEC. 3. Effectivity. -These Rules shall take effect fifteen (15) days after the date of its publication in
at least two (2) newspapers of general circulation.